yusuf: good morning. this is bloomberg daybreak: europe. china signals its tolerance for the yuan's rally is fading. the factory pmi readings soar. asian stocks and european futures retreat as investors weigh inflation risks.

we get the next hand with the jobs report. markets in the u.s. are closed today. oil edges higher ahead of the opec-plus meetings. the alliance is likely to restore plans to begin the outputs that halted during the pandemic. welcome to the program. if you're out on holiday, good for you. if not, you did the right thing by tuning into this program because there are still quite a few markets trading and we had some important economic data out of china. stocks remaining there a record. the many futures contract, just a tad bit higher. no treasuries cash trading in asia. we are getting the futures contract. the yuan in focus. it does not go all the way to 620.

investors set the fixing to a lower than expected level. we are seeing some verbal intervention, brent crude up 0.6%. the countdown is on for the opec-plus meeting. any color on the prospect of returning supply will be critical. let's turn to some of the european calls, marginally higher than on the euro stoxx future. lower now, a quarter of 1% as we head for some of these markets to come online. the euro-dollar is currently flat. green note on gold. the biggest monthly gain since july on inflation bets. they have erased their 2021 losses and is one of the best-performing metals in may. soaring input prices weighed on

smaller chinese factories. let's get more on this with juliette saly. is there a sense that this nascent momentum we began to see in the recovery has peaked? juliette: when you look at market action in china, it seems like the market thinks that is the case with a little bit of weakness creeping through. the official gauge coming in 51.0, which is slightly below what estimates were. pretty much bang in line. but there is concern a was slowing from where analyst had expected some strength. the interesting point is with fewer working days in the month compared to april, that could be affecting the results. when we look more broadly at the nonmanufacturing gauge, you can see on my chart that we saw in put prices spike. they jumped 72.8 in the month, the highest level since 2010.

it is due to higher inflationary pressures. bloomberg intelligence saying there could be blips in terms of concern. the recovery starting to peak. against this backdrop, you could see the pboc unlikely to raise interest rates even as you are seeing some of these prices build. yousef: in the meantime, the chinese yuan both offshore and onshore, that is gaining despite some of the verbal warnings from officials that came through the state newspaper. juliette: this is quite extraordinary, the strength you are saying, particularly in the onshore you want. we are looking at a basket of currencies rising to its highest levels since 2016, continuing to gain against the dollar even though you had a warning coming through from a former pboc official, saying to a state run news agency sunday that the rise in the yuan is due

to short-term speculation and probably will not last. he has joined a growing chorus that there has been a subtle policy shift from policymakers that could start to draw some increased scrutiny in global markets, particularly when the dollar is losing momentum. you could see the see ny at 2.2 over the next months. despite a weaker statement from the pboc, it is quite extraordinary to see the run-up in the onshore and offshore. yousef: let's go to discussion and get on to lucy coutts. lucy, do you subscribe to the view that manufacturing momentum is likely to have peaked in china? guest: there are many sub-indices within the overall

number 51. it is marginally below market hopes. but we are seeing steadier growth in china now. we have to remember that china is the biggest user of commodities, the it co -- be it coal, iron ore, etc. the highest number is the export number, which is contracting. that is a concern. yousef: what about the implications for the local currency? we mentioned the job numbers earlier in the program. the markets live team is asking whether the rally will continue. maybe it will go to 620 if you assume a broader weakening throughout the year. guest: again, that is a concern, but the pboc have said the currency cannot be used to offset the higher prices of commodities.

it may well hit 620, and that is going to be further contraction within exports. but we do know that china is trying very hard to change its economy and become less reliance on manufacturing, become much more of a services economy much like the u.s. or the u.k., where we have seen continuing expansion in the pmi services rising to 55 point -- 55.2, i think. yousef: the other story that has caught the attention of our global audience is around an asset management company, the bad debt involved, and questions about the ability to meet the bondholder obligations. they have wired just under $1 billion to some of this stick -- some of the

stakeholders. is it enough to restore credibility in china's credit market? guest: yes, i think it is. i think it is a positive signal. the bond market in china is beginning to open to western investors, which looks very attractive when you compare 3% for bonds in china, and that compares to what we get in the west. yousef: chinese stocks are not going to like these pmi numbers. that is what we saw in the initial reaction. how does that fit into your broader views in the asian opportunity set for investors -- sector for investors? guest: i am positive investing in china as a long-term investor area we have seen exponential growth, particularly in the big names, such as tencent, alibaba.

and i think we will see continuing opportunity there. but there will be bumps along the road. the economy in china is expanding exponentially, and i think it is at an inflection point. for investors to miss out on that opportunity, i think stoxx's will be heading south. yousef: what are the nuances to that? is there a particular sector where you would say that is worth adding exposure to reopening? if you assume all goes well with the covid recovery. guest: i think technology would always be somewhere that i would invest. i think it is a word used too blithely. i think in con them he -- i

think economy is embedded in any business, be at the stocks we

>> what the president keep saying in action is not an option. the american people expect us to do something, and it is my hope that these continued conversations over these next few days will be productive and lead to that clear direction. >> he has expressed to me and our group numerous times his desire to work with us to negotiate a package, and i think that is what you see and the fact that we are inching toward one another. i understand there is a deadline here. i understand that we may not get there. but it will not the because we did not try. yousef: that was pete buttigieg and republican senator for west virginia shelley moore capito, talking about the prospects of a bipartisan infrastructure deal. democrats and republicans continue to debate the size and scope of the spending.

also on the radar, u.s. jobs. the report is due on friday. that could be a pivotal moment for investors after a surprisingly tepid jobs gain. payrolls may have risen by 650,000 in may. that would be a significant toleration from the previous games of 266,000. that month, economists projected a hiring search. it was one of the biggest downside misses on record. lucy coutts is still with the program. your initial reason for the liberation's that are going on on capitol hill and what is required to underpin some of the positive green shoots around infrastructure. guest: the jobs data, as you rightly said, is lower than we had hoped. but the bounceback from covid

has caught most large businesses by surprise. we see retailer inventories at all-time lows. we see prices rising. companies are trying to hire, but they cannot hire as quickly as the demand to satisfy the demand. i think there will be a latent effect where we see the jobs data come through more positively in the u.s. yousef: how is the size and scope of this infrastructure plan playing into your projection? does it make it more likely or does it make it more enduring? guest: yes, definitely. i think infrastructure spending is a massive stimulus to the u.s. economy. the concern where markets are looking those they will add to the hot running inflation numbers we are seeing at present.

i think inflation is going to be temporary. we have a lot of these short-term temperatures. we have the cost of goods going up. but for inflation to be sustained, we need to see continuing price rises. i think those will stabilize. the stimulus that is going to support the inflation stays for now. yousef: i went to the list of speakers for the week and there are quite a few fed voices that they are going to share. that includes the likes of the philadelphia president patrick harker, the such a -- the chicago president, the dallas fed president also in the mix. are you expecting any particular nuance from this cascade of voices? guest: no, i'm not.

i am hoping they will continue to be very accommodating. they will just let the economy run hot. but we have all been locked up for many, many months. the demand for goods is rising. we have got the spending power, we have got the stimulus. there are all sorts of factors pushing inflation higher. i think the central banks need to keep the message very calm. i don't sense there is going to be more any -- i don't sense it is going to be anything more than temporary. yousef: how do you approach any recalibration in a given portfolio given what we have discussed? you are saying avoiding hugging the benchmarks. what are some of the recommendations you are making to clients this morning? guest: i am a long-term investor, so i take a 5, 10, 20,

30 year view. over that period of time, you are going to have an awful lot of bumps along the road where markets get rattled. if you are a long-term investor, your portfolio's valley will rise with the markets and fall, which i cannot predict. but if you invest in best in class companies, whether they are in china or here in the u.k., those will be enduring and those will see a portfolio's value rise over time. but that does not mean to say there are not going to be uncomfortable times and difficult conversations along the way. yousef: lucy, good to touch base. thank you for sharing some of those views. now let's get you the bloomberg business flash headlines again with laura wright. laura: apple is trying to open even more stores, upping its

retail presence around the globe. a german paper reports that inner-city locations are struggling amidst the shift to online sales. the pandemic has exacerbated the pressure on retailers grappling with the coast of -- with the cost of prime locations. china's more wrong has made its biggest bond payment. sources tell bloomberg it is adding to signs that they still have access to near term liquidity. they have yet to miss a payment since investors failed to report annual results on time. credit suisse is considering retention for top performers. in the wake of the scandals, it is looking to reduce risk. it is cutting ties with softbank , and also temporarily barring clients from withdrawing all of their cash.

that is the bloomberg business flash. yousef: thank you very much. let's give you a preview of what is in the pipeline. oil ticks up higher on the global recovery, but the market is holding ahead of the next round of opec-plus meetings. this is bloomberg. ♪

yousef: this is bloomberg:

daybreak europe. oil is edging higher on strengthening demand as economies emerge from pandemic restrictions. but the market remains focused on opec-plus's upcoming meeting, in which oil-producing nations will discuss how fast to increase supply with virus resurgent in many countries. joining us now is paul lots, bloomberg energy reporter in dubai. we understand it is going to be about color commentary around when we might get iranian barrels back on the market and what they are likely to do. what are you hearing from your sources? paul: yes, iran is going to loom large over tomorrow's opec-plus meeting. the cartel is waiting on the talks in vienna to see what happens. watching them very keenly.

many members of the group, including saudi arabia, seem to have accepted the idea that we will see more uranian oral -- iranian oil barrels. all that depends on how quickly the u.s. decides to ease sanctions. but we could be seeing anything from an extra half a million barrels a day to one million barrels a day from iran, and that certainly is something that opec-plus is having to weigh this week. it is weighing that against a surge in demand, in fuel demand, primarily in the u.s. and europe. the market is already at a deficit. demand is outstripping supply by roughly one million barrels a day. iran will come back on, which will add supply, but at the same time picks up the two big markets. yousef: there are quite a few

different stakeholders in the opec-plus group, and they do not all necessarily see eye to eye. what are the standouts, and what has been said? >> the most cautious one is saudi arabia. saudi arabia has pretty much since the start of the covid crisis urged fellow members to fall back. in riyadh, they think that opec-plus should not rush to add barrels to my even though oil is up around 30% this year. in the other camp, probably the two most important members are the uae and russia. both of those would quite like

to increase production and take advantage of the price. yousef: paul, thanks for that. that is bloomberg's energy reporter paul wallace with a preview of what we might get from opec-plus in the coming hours. ♪ ♪ look, if your wireless carrier was a guy you'd leave him tomorrow. not very flexible. not great at saving. you deserve better... xfinity mobile. now they have unlimited for just $30 a month... $30. and they're number one in customer satisfaction. his number... delete it. i'm deleting it. so, break free from the big three. xfinity internet customers, switch to xfinity mobile and get unlimited with 5g included for $30 on the nations fastest, most reliable network.

yousef: good morning from bloomberg's middle east headquarters. this is "bloomberg daybreak:

europe." starting off with china, the may factory pmi readings -- has the recovery peaked? and investors way inflation risks and strength of the economic recovery. markets in the u.s. and u.k. are close today. oil edges higher ahead of the key opec-plus meeting, and the alliance is likely to reform plans to restore some of the output halted during the pandemic. welcome to the program. if you are on holiday, enjoy your time off, if you have tuned in, it is the best thing you could have done. let's get you some updates from different asset classes. as much as u.s. markets are closed for memorial day and u.k. markets closed for spring back holiday, there have been important moves, s&p many

futures called a little higher. even though treasuries cash trading is underway in asia, because of the holidays, the expectation is month end rebalancing could spur some buying. the chinese yuan onshore and offshore both in focus, the country moving to cool the rally with verbal warnings in state run newspapers. not happy with the gains. also eight weaker than expected level for the fixing. brent crude eating a lift and we are counting down to the policy meeting on tuesday, any color or commentary -- headed for the biggest monthly gain since july on the wider insulation beds and erased 20 -- bets and erased 2021 losses could global stocks

remain near a record as it is a jampacked week of events, manufacturing pmi's out of china remained well in expansionary territory, while nonmanufacturing climes. we are joined by our correspondent. the big takeaway is that momentum could have peaked. at some context for us. >> i think you are right, that seems to be the takeaway today. on a headline basis, pmi was pretty solid. still well into positive territory. it is keeping the expansion going, but in the components of the index, i think people work taking the most information from today and in particular, if you look at the new orders component, that has slipped into negative territory. there could be something of a

cooling of the export boom we seen over the past year. we've also seen a big jump, to a decade high for prices for components, that includes downstream inflation pressures factories are facing. smaller companies in particular are feeling the pain for those rising input costs. as you say, the headline numbers are somewhat stable, expansion underway, it's about where we are going to be and this perhaps suggests we are nearing a peak if we have not already peaked. yousef: what about occasions for local currency? we saw the lower daily fixing but the market seems to be pressing on toward the 620 handle. what else can the pboc do to put a stop to this if they are not happy with the gains. ? -- the gains? >> it did seem that there needed

-- that there was a mood shift at the central bank. they are not explicitly signaling they are unhappy with the yuan's current levels, there is a -- is not a sense of urgency. nonetheless, there is a feeling it is one way appreciation that won't go on forever. that's part of why you had the flurry of medications and commentary -- of communications and commentary. saying things will change, it could be the fed moves toward tightening over the near term, it will have an impact on the yuan. could be capital flows moving out of emerging markets slow down the yuan. is not necessarily an immediate signal of a course correction but the authorities are letting it be known that the yuan will not go in one direction indefinitely.

yousef: thank you for that. let's get you the first word news, a bit of a roundup of the other stories we are watching. laura: the latest round of talks with iran over revising the 2015 nuclear deal have kicked off in vienna. the russian envoy says there is an understanding and the current round should be the final one. the deal aims to reinstate caps on iran's nuclear program in exchange for the countries returned return to the oil market and global economy. the biden administration has announced it will reimpose sanctions against nine estate owned enterprises in the larue's and is working on additional penalties to target officials in the lukashenko administration. the u.s. urging citizens to avoid belarus over the forced landing of orion airflight and arrest of a dissident journalist. the tokyo bulimics is facing a shortage of doctors due to the pandemic. -- tokyo olympics is facing a

shortage of doctors due to the pandemic. they've had to cut the number. japan's medical establishment is increasingly worried about bringing 78 thousand people from 200 countries to the capital. u.k. prime minister boris johnson has married his fiancée and a small ceremony at a london cathedral. it is his third marriage and make some the first prime minister to marry in office in nearly 200 years. they plan to celebrate with family and friends next summer. global news 24 hours a day on air and bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. yousef? yousef: thank, laura wright. around the corner on the show, the summer season looms large as economies begin to open up to international travel. simone foxman caught up with the

qatar airways ceo to get his views on a range of issues, including the state of aviation more broadly. that conversation is next. this is bloomberg. ♪

yousef: this is "bloomberg daybreak: europe." qatar airways ceo has lashed out at airbus for the second time this month, warning the airline might stop taking deliveries from the french playmaker over an unspecified issue. the cryptic comments came in an interview with simone foxman.

>> we are a state-owned company. our government injected $3 billion into our equity. simone: $3 billion? >> $3 billion because we were burning cash. keep in mind there is not a single airline in the world who has not gone to their government for help. but they have gone to their government for help. simone: you went to airbus and boeing and as -- and asked for deferred delivery of aircraft. you taking any deliveries this year? >> we are, we are taking deliveries from boeing and are earmarked to take deliveries from airbus. we have an issue with airbus we need to settle, and if we are not able to settle that serious issue we have with them, we will refuse to take any aircraft from them until our issues are

resolved. simone: ok -- which aircraft? >> i cannot tell you what the issue is but it is a serious issue which we need them to address or qatar airways will not take delivery from them. simone: does it have to do with the a-380's? >> no, that is already water under the bridge. what is important for us is our future relationship with them. they need to know we are a very serious and very important player. they should know that affecting our relationship with them cost them stress in the relationship with other airlines in which we have shareholdings. simone: the 777x from boeing is hotly anticipated, but you will

not be the launch customer -- >> we are the launch customer. simone: you are the launch customer? ok. >> we are looking forward to receiving them. simone: what is the timing? >> boeing has delayed the deliveries until 2023 and we are fine. if they can deliver in any 22, we will accept them. the only problem we have is stress in the supply chain for the entire aviation industry, and i hope that will be resolved by the time we are due to receive our 777x. simone: emirates tim clark has bashed the 777x, why? >> he has opinion -- his opinion and i have mine and i think my opinion utters more. i am not due to retire. simone: what is your outlook in

terms of m&a in the next 18-24 months? >> it is difficult to say because there is no resolution to the pandemic. you know, there are waves and waves of infections happening, there are spikes in certain regions. australia thought they had it completely eradicated and suddenly melbourne is under lockdown. it is so -- what is the right word? unpredictable that we don't know how to plan what we will do from one year to the next. yousef: very interesting discussion with the qatar airways ceo, speaking exclusively to simone foxman. other key figures in the airline industry will tell us about what to expect from the forum,

featuring heads of state, top ceos from around the world kicking off on june 21 marks that on your calendar and stay tuned to bloomberg tv for coverage. credit suisse is grappling with dual dilemmas. retaining top tankers and drastically reducing risk in the wake of scandal. the chairman is attempting to recover from blows by cutting ties with softbank, considering retention bonuses for top performers, and there was a first-order pretax loss of about $1 billion for the swiss bank. joining us is david scanlon in singapore. what is the new chairman going to do exactly terrain in -- to rein in risk at credit suisse? david: what a month it has been.

you said he is going to overhaul operations and reduce risk, and the biggest moves that you mention, cutting ties with softbank. they had some significant losses, so softbank has withdrawn a lot of money from credit suisse funds and the bank is saying we are not going to deal with you for now. a very significant move. they are going to have to deal with some things coming out, the connections with ring field to saunter group to -- greenfield with sanjai gupta. it is clear that the bank ignored their internal warnings about him. there are some serious questions he's going to have to answer about the relationship.

and after archegos, many were hit hard but not as hard as credit suisse. a lot to deal with. yousef: the last three weeks have been quite good if you are looking to belong on the stock, we were about nine francs per share and now we are about 9.80 per share. in terms of departures of the bank is dealing with, they also have to grapple with money flowing out of some of the funds. what measures are being put into place to try to mitigate that a little bit? david: it is not surprising if you are a highflying banker and the bank is saying they are going to derisk, you have concerns. there is a cloud over the bank. in financial services, they have lost several bankers going to other banks.

many of these bankers are paid in stock and the stock has not done well, down about 14% this year at a time when the bank index is up 26%. a good year for most banks, just not for credit suisse. yousef: david, it has been fantastic touching base. thank you for those details. that is david scanlon in singapore. conspiracy theory or science? china reacts angrily to the u.s. calling for a second investigation into the origins of covid-19. experts say the theory that the coronavirus leaked out of a wuhan lab is not off of the table. we will take a closer look and what it means for the road ahead. this is bloomberg. ♪

yousef: this is "bloomberg daybreak: europe." u.s. disease experts say china -- they need china's help to trace the origins of covid-19. they told that support for the wuhan lab leak theory has increased. >> he cited a ledger out of the lab, and it has continued to expand. the fact that it has come out of nature has not budged. china has not provided evidence that could be exculpatory. they have refused to provide samples from the lab. yousef: let's get more from jason gail. what are some of the working theories in the hunt for the origins of coronavirus? jason: understanding where this

new pathogen emerged was never going to be an easy endeavor. all of the evidence accumulated so far is really circumstantial. the two coronaviruses both came from animals biggies -- species and so a wet market would support that theory. yousef: what i'm trying to understand and perhaps you can help me get there, is how not to long ago, just late last year, the idea that this emerged from a lab in china was brushed aside , considered to be part of fringe conspiracy theory thinking. that has gone completely 180. how did that happen? jason: there hasn't been fresh

information that would add anything to either theory, either a lab escape theory or natural origin theory. there is a sense that the lab escape theory wasn't given sufficient consideration, and the who director general has said this. more than a dozen esteemed scientists have echoed these sentiments in mid-may. yousef: is everybody on board with the effort to find the origins of covid-19? because you have the sovereigns, but they have competing interests, united states, china and many others, and you have the folks at the who. are they working together? what are you seeing? jason: it's clear the consensus is we need to get to the bottom of it but there are many challenges. there is the difficulty in proving a negative, proving coronavirus did not come out of

the lab. there's also the politics, posturing and finger-pointing, it is doing nothing to get to the bottom of how the virus emerged. some scientists say questions about a lab leak will not be solved until there is a thorough, independent investigation but it is unlikely the chinese government will allow that. if a lab accident turns out to be the source, it would have huge ramifications for the regulation and practice for for all edges. yousef: thank you, jason gale. let's get you a bit of a preview of what is coming up this week. opec-plus countries meeting tomorrow and they will review their oil production plans. the alliance expected to continue revising outlook as -- output. there are also talks about the nuclear deal with iran, and a policy decision from the reserve bank of australia.

are they going to signal it is time to move away from some of the emergency measures? that will be front and center when we get that decision in about 24 hours. on wednesday, it is the start of the st. petersburg international economic forum. president putin will give the keynote speech. on friday, the g7 finance ministers and central bank chiefs will be meeting in london ahead of the main g7 summit next week, setting the scene and making sure everyone is comparing notes and there is something tangible to work with for the main meeting. watch out for a rate decision from india's central bank as well. i want to sit -- circle back to the markets for you. some are off for the holidays, the u.s. and u.k., but ultimately there are markets online and indicators can work with. one of them is contracts around stocks on s&p 500 minis.

liquidity a little lighter. the last few hours have really been about what china is doing in terms of trying to cool the rally of the yuan and pmi data we got that disappointed some observers, our guests earlier did not read too much into it, but our team think the momentum may have peaked in terms of the manufacturing rebound in china. that will be another step toward the key 6.20 level, a broader weakening of the greenback at the end of the year for brent crude up six tens of 1%. we await details from opec-plus in the coming hours. how will they deal with the pressure from the supply side and reality of the demand-side? also precious metals, look out for iron ore and gold u.s. equity -- and gold.

coverage will continue throughout the morning. we are going to be at the forefront of it all. this is bloomberg. ♪

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matt: good morning. welcome to "bloomberg markets: european open." i am matt miller in berlin. the castrated is just about one hour away and here are your top headlines from the bloomberg terminal. asians docs and european futures retreat as investors weigh inflation risks and the strength of the economic recovery. they will get their next hint with this week's jobs report. markets and the u.k. and the u.s. are closed today.